Clean Energy

Carbon Reduction Credit Program

“A Carbon Reduction Credit Program would be a fair, efficient, and quick means for states to achieve the new Clean Power Plan requirements,” said Steve Michel, Clean Energy Program Chief Counsel.

States Need to Meet New Carbon Pollution Standards

On June 2, 2014, the Environmental Protection Agency (EPA) released new carbon pollution performance standards for existing power plants as part of the new Clean Power Plan. EPA’s proposal sets a standard for each state for the years 2020 to 2030 and beyond. These statewide carbon pollution rate standards can be achieved by a variety of approaches, including increasing the efficiency of existing fossil fuel power plants, shifting generation from high pollution emitting to lower pollution emitting plants, and increasing the use of zero-carbon energy efficiency and renewable energy resources. Importantly, states have flexibility to reach their standards in whatever way works best for them.

Western Resource Advocates has been evaluating various approaches to simplify compliance and keep costs low, in support of states achieving these very important carbon pollution standards. One option Western Resource Advocates has developed is a Carbon Reduction Credit Program that would be simple, flexible, and easy to enforce, assuring compliance. The program would allocate positive carbon reduction credits to power plants emitting below the state’s emission rate standard, and establish a credit deficit for plants emitting above the state’s pollution standard. Plants could trade credits to achieve the standards — benefiting low-emission power production and providing a market mechanism to achieve needed emission reductions at the lowest cost.

transparent for various stakeholders to understand and track compliance,

able to preserve state autonomy over renewable energy, energy efficiency and electric utility operations and resource choices, and

low cost to implement.

Western Resource Advocates staff members John Nielsen, Clean Energy Program Director, and Steve Michel, Clean Energy Program Chief Counsel, have developed a document outlining in depth how this program would work. For more information, please see their Carbon Reduction Credit Program Working Paper. The paper was also published in March 2015 in the Electricity Journal.

For questions, comments and suggestions on this working paper, please contact the authors; their contact information is included in the paper.